SHALES:

The Drilling Treadmill

EnergyPolicyForum

Photo Credit: J. Henry Fair

Encana$1.7 Billion

ExxonMobil $2 Billion

Devon$2 Billion

Chesapeake

$3.3 Billion

BP$2.11 Billion

BHP$2.84 Billion

(50% of Fayetteville assets purchase)

Write Downs

Shell$2 Billion

$35B in write downs among 15

shale operators

CAPEX = Free Cash Flow?

NO

-30.

-2.5

25.

52.5

80.

2010 2011 2012 2013

$B

illio

ns

Free Cash Flow CAPEX

$235 Billion CAPEX and

$81 Billion in Negative Cash Flow over 2010-2013

Free Cash Flow and CAPEX for Shale Drillers, 2010-2013

(data courtesy of Deborah Rogers, April, 2014)

Frackonomics

The Real Job Story

Oil & Gas

• Approx. 181,000

direct industry jobs

(2011)

• Approx. 45% of

total energy gen.

capacity

Renewables

• Approx. 183,000

direct industry jobs

(2011)

• Approx. 15% of

total energy gen.

capacity

Recovery EfficiencyHow Much Gas Can We Get Out?

“The recovery efficiency for the five major [shale gas] plays averages 6.5%...

This contrasts significantly with recovery efficiencies of 75-80% for conventional gas fields.”

Oil & Gas Journal, December 2012

EROEIEnergy Returned On Energy Invested

• Crude, early U.S. - 100:1

• Crude today - 11:1

• Tar Sands - 3:1

• Tight Oil - <7:1

• Troubling dependence on low EROEI fuels

TEXAS

Revenue: $3.6B

Road Damage: $4.0B

ARKANSAS

Revenue: $182M

Road Damage: $450M

PENNSYLVANIA

Impact Fee Revenue: $405M

Funds to maintain roads: $3.5B

Road Damage vs.

Revenues

Sources: State Comptrollers, State DOT

NORTH DAKOTARevenue: $3.3B (since 2010)

Road Damage: $7.0B

Majors Struggling

SOURCE: YAHOO FINANCE

Shale Exportation

In 2008, the City of Fort

Worth, Texas received

$50 million in revenues

from 44 shale gas

wells.In 2012, the city

received only $23 million

from 397 wells.Source: City of Ft. Worth

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